“The deferred 2020-21 Federal Budget comes at a critical time with the economy entering its first recession since the early 1990s and with high levels of uncertainty hanging over its trajectory over coming months,” Innes Willox, Chief Executive of the national employer association Ai Group, said today.
“For the near-term, measures are clearly required to assist and secure the recovery of activity, investment and employment in the wake of the COVID-19 crisis. This objective needs to be the leading priority for the 2020-21 Budget.
“The Budget also presents an opportunity to act on measures that will rectify the underlying weaknesses in the economy that were evident prior to the onset of the COVID-19 crisis.
“Fortunately, our generally prudent approach to fiscal policy over many years means we are relatively well-equipped not only to manage the increased deficits and the greater levels of debt that have come with the COVID-19 crisis, but also to manage further stimulus in the 2020-21 Budget.
“Fiscal strength must remain a priority and its restoration will present challenges over coming years, including in relation to changes that will be required to our pattern of taxation. For the 2020-21 Budget however, it would be premature and detrimental to both the near and longer-term objectives to hold back on well-considered measures even though they will add to the budget deficit.
Ai Group’s recommendations for the October Federal Budget include:
- A range of measures to boost employment, skills and employability including:
- Broad wage support for commencement of new apprentices and trainees
- Program of new pre-employment initiatives for youth
- Program of skills assessment and adaptive training for displaced workers
- Incentives for companies to invest in training for existing workers
- National program of wage support and incentives for cadets and interns in companies
- Funded multi-partner industry-training hubs
- Improved funding for vocational education and training.
- Extend the term of the Coronavirus Supplement and make a further Economic Support Payment similar to earlier stimulus packages.
- From 1 January 2021 increase take-home pay and household spending by bringing forward some of the already-scheduled reductions in personal income tax. Ai group recommends:
- Lifting the upper threshold of the 19% tax rate from $37,000 to $45,000;
- Reducing the tax rate on incomes between $45,000 and $90,000 from 32.5% to 30%;
- Bringing forward the changes to the Low Income Tax Offset (LITO) and the Low and Middle Income Tax Offset (LMITO) by six months.
- Boosting business cash flows, investment and employment by extending the reduction to 25% in the company tax rate that is already scheduled to take effect from next July for business with turnover below $50 million, to companies with turnover of less than $1 billion.
- The federal government should work with the states and territories to further accelerate infrastructure and housing projects already in the pipeline and to add further projects to the pipeline with accelerated approval.
- The withdrawal of the legislative proposal to cut the coverage of the Research & Development Tax Incentive and to remove the spectre of the anomalous application of an intensity-based program.
- Advancing environmental objectives by allocating $500 million over two years for capital grants to rapidly scale up the penetration of existing energy efficiency and energy management technologies.
The full Ai Group Budget Submission is available here.
